The Productivity Puzzle: A Firm-Level Investigation into Employment Behaviour and Resource Allocation Over the Crisis

Barnett, Alina; Chiu, Adrian; Franklin, Jeremy; Kokoreva, Maria

doi:10.2139/ssrn.2428177

Cited by 46 publications

(41 citation statements)

References 18 publications

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“…As a result, it seems the industry is evolving towards a dual structure where the largest banks (in terms of services they provide and number of customers they serve) are unable to catch-up with the best performers in the industry while being surrounded by smaller institutions which may experience positive productivity growth but whose technological capabilities to compete with the best performing banks is limited. These results are consistent with the findings of the Bank of England (Barnett et al, 2014) and of the UK Treasury (HM Treasury, 2015). The Bank of England has found that productivity in the sector has fallen considerably following the financial crisis 18 ; at the same time, our results concur with the view of the UK Treasury suggesting that the financial crisis has altered the nature of competition in the banking sector as concentration in the sector has increased with the result that the sector will evolve towards a market structure where a small number of large institutions will dominate the industry.…”

Section: Resultssupporting

confidence: 92%

Trademarking activities and total factor productivity: Some evidence for British commercial banks using a metafrontier approach

Duygun

Sena

Shaban

2016

Journal of Banking & Finance

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In this paper, we compute a non-parametric Metafrontier Malmquist index to evaluate the Total Factor Productivity (TFP) change among UK-based trademarking and non-trademarking commercial banks between 2005 and 2013. The use of the metafrontier approach allows us to: a) identify the drivers of TFP growth for each group of banks, b) compare the TFP growth of each group to the TFP growth experienced by the whole industry, and c) assess the extent to which the former catches up with the latter measured along the metafrontier. Our results suggest that TFP has been increasing among trademarking banks up to the onset of the financial crisis but this process has since reversed. The catch-up indexes suggest that both groups of banks were catching up with the metafrontier up to the financial crisis although the drivers of this process differed between the two groups. After the financial crisis, improvements in technology have been driven by a small number of commercial banks i.e. the non-trademarking banks. These results suggest that a large section of the commercial banking sector has not been able to overcome the effects of the financial crisis.

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Section: Resultssupporting

confidence: 92%

Trademarking activities and total factor productivity: Some evidence for British commercial banks using a metafrontier approach

Duygun

Sena

Shaban

2016

Journal of Banking & Finance

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“…But for the U.K., resource slack had sharply diminished well before this writing. Barnett et al (2014) and Haskel et al (2015) discuss a range of alternative explanations but conclude that much remains unexplained.…”

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confidence: 99%

The Pre-Great Recession Slowdown in Productivity

Cette¹,

Fernald²,

Mojon³

2015

ERWP

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In the years since the Great Recession, many observers have highlighted the slow pace of productivity growth around the world. For the United States and Europe, we highlight that this slow pace began prior to the Great Recession. The timing thus suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. For the United States, at the frontier of knowledge, there was a burst of innovation and reallocation related to the production and use of information technology in the second half of the 1990s and the early 2000s. That burst ran its course prior to the Great Recession. Continental European economies were falling back relative to that frontier at varying rates since the mid-1990s. We provide VAR and panel-data evidence that changes in real interest rates have influenced productivity dynamics in this period. In particular, the sharp decline in real interest rates that took place in Italy and Spain seem to have triggered unfavorable resource reallocations that were large enough to reduce the level of total factor productivity, consistent with recent theories and firm-level evidence.Keywords: Productivity Growth; Great Recession; Misallocation; Convergence JEL Codes: D24, E23, E44, F45, O47Please address correspondence to fernaldjg@gmail.com. We thank Fabio Canova, Robert Inklaar, Robert Kolmann, Eric Leeper, Werner Roeger, and seminar participants at several institutions for helpful comments. We also thank Genevieve Denoeux, Andrew Tai and Bing Wang for helpful research assistance. John Fernald thanks the Einaudi Institute for Economics and Finance for hosting him while writing much of the paper. The views in this paper are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco, the Banque de France, or anyone else associated with those institutions.Since the Great Recession began in 2007, productivity growth in advanced economies has continually surprised to the downside. 1 A severe downturn and slow recovery could affect productivity through various channels, both cyclical and structural. But, as we emphasize, the slowdown in advanced-economy total factor productivity (TFP) growth was broadly underway prior to the crisis. 2 The pre-Great Recession timing suggests the importance of factors other than just the deep crisis (or ensuing policy changes) itself.To understand the evolution of advanced-economy TFP growth prior to the crisis, we highlight three broad factors that have shaped the global economy in recent decades: Technical change, structural rigidities, and declining real interest rates and abundant credit. Each factor has attracted analysis and attention but they have not, typically, been considered together. For expositional clarity as well as data availability, we focus on a small number of major advanced economies: the U.S. and the four main Euro Area countries (Germany, France, Italy, and Spain).For the United States, which we assume is at the frontier of knowledge, we highligh...

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“…The reasons behind this productivity puzzle are numerous: falling productivity in the oil and gas and financial sectors; weak investments reducing the quality of equipment; the banking crisis generating lack of lending to more productive firms; employees being moved to less productive roles within the firm; and slowing rates of innovation and discovery, as well as population ageing. However, these factors are not sufficient on their own to entirely explain the phenomenon (Barnett et al 2014, Harari 2017. The GDP growth realised in the past few years is mainly attributable to the increase in the hours worked (that is, increasing employment and decreasing unemployment) rather than productivity growth, which means that the labour market performance has been relatively strong during and after the crisis.…”

Section: The Impacts Of the Global Financial Crisismentioning

confidence: 99%

Continuing divergence after the crisis: long-term regional economic development in the United Kingdom

Zsibók¹

2017

Reg. Stat.

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The Productivity Puzzle: A Firm-Level Investigation into Employment Behaviour and Resource Allocation Over the Crisis

Cited by 46 publications

References 18 publications

Trademarking activities and total factor productivity: Some evidence for British commercial banks using a metafrontier approach

Trademarking activities and total factor productivity: Some evidence for British commercial banks using a metafrontier approach

The Pre-Great Recession Slowdown in Productivity

Continuing divergence after the crisis: long-term regional economic development in the United Kingdom

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